QUESTION 5

Hak Young is daunted by that monthly payment amount and is trying to figure out how he can make paying off his loan more manageable. He went to his bank and found out he could get a personal line of credit that he could then use to pay off his credit card. The line of credit has an interest rate of 10.75% compounded weekly.

a.Assuming he still planned to pay off his debt in 5 years, what would his monthly payments to the bank be now?

b.What will be the total interest paid?

QUESTION 6 Hak Young realizes that payment amount, even though reduced, is just not manageable based on how much he currently makes and all of the other expenses he also has to budget for. As a result he decides paying off his debt in 10 years is simply more realistic.

a.What would Hak Young's monthly loan payments be with this new timeline?

b.What will be the total interest paid?

QUESTION 8

Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 4.25% rate of return, compounded quarterly. To be sure they dont go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years.

a.What would their monthly savings amount have to be to reach this goal?

b.What will be the total interest earned?